Financial Markets Today

Financial Markets Today

Global financial markets traded very volatile today, on further escalation of U.S./China trade tensions with the Chinese government announcing new retaliatory sets of tariffs on ca $60 billion worth of imports from the U.S beginning 01 June 2019. This comes after last Friday’s implementation by the U.S. of an higher 25% tariff on ca $200 billion worth of imports from China and the apparent collapse of previous trade talks between the world’s largest economies, with investors seeking safety in
treasuries of developed economies while global equities declined as U.S. Dow Jones Industrial Average (DJIA), S&P 500, NASDAQ, German DAX, French CAC and Japanese NIKKEI all lost ca -2.46%, -2.45%, -3.21%, -1.52%, -1.22% and -0.72% respectively.

We expect current escalating tensions between U.S. and China to further raise global economic growth uncertainties for 2019, with fears of possible rise in risk-off sentiments and increased demand for government treasuries of Developed Economies (DMs) in the near term. We also expect this to negatively impact global crude oil prices in the near term, with Brent Crude oil price dropping to ca $70 per barrel.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Banking system liquidity opened positive today at ca ₦121.6bn down from ca ₦609bn on Friday. There was no Open Market Operation (OMO) auction by the Central Bank of Nigeria (CBN) today, however, Banks had to make provisions for Wholesale FX Intervention.

Treasury Bills
The treasury bills secondary market kicked off the week on a rather quiet note today, with some demand on the mid-dated maturities. In the absence of an Open Market Operation (OMO) auction by the Central Bank (CBN), average rates shed ca -4bps day-on-day, with the 26 September 2019 maturity closing at 12.24% from 12.36%.

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded higher day-on-day at 16.00% and 16.71% from 9.14% and 10.00%. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds
The bonds secondary market began the week on a quiet note today, with few transactions seen on mid-to-long dated maturities. Average yields gained ca +2bps day-onday, with the February 2028 maturity closing at 14.29% from 14.22%.

Eurobonds

The nation’s Eurobonds market opened the week on a bearish note today, with some sell offs seen across the curve. Average yields gained ca +8bps day-on-day with the January 2049 maturity closing at 8.67% from 8.59%.

Equities

The Nigerian equities market began the week on a negative note today, declining for a 6th consecutive trading day, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -1.26% day-on-day to close at 28,484.44pts, and market’s year-to-date returns at -9.36%. This was mainly due to losses in Stanbic IBTC Bank Plc (- 4.24%), Guaranty Trust Bank Plc (-3.13%) and Zenith Bank Plc (-1.50%).

The NSE Banking, Oil & Gas, Consumer goods and Industrial indices all shed ca -280bps, -105bps, -42bps and -15bps respectively. UAC of Nigeria Plc led the volume chart with 41.29m units while Guaranty Trust Bank Plc led the value chart with ₦1.18bn worth of trades.

The Naira remained flat against the dollar in both the interbank and parallel markets today, at ₦306.95/$1 and ₦360/$1 respectively. It remained unchanged against the Euro and the Pound sterling at ₦402/€1 and ₦472/₤1 respectively, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated to ₦360.48/$1 from ₦360.55/$1.

Oil prices declined today reversing early gains, on increasing concerns of global growth as the Chinese government announced new retaliatory tariffs on U.S. imports. Brent crude oil price was down ca -0.74% day-on-day at $70.10pb, while WTI was down ca -1.10% day-on-day at $60.98pb, as at report time. Spot gold gained ca +1.02% to close at $1,300.50 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
NEM 0.55 0.05 +10.00%
COURTVILLE 77.00 7.00 +10.00%
CHAMS 0.26 0.02 +8.33%
REGALINS 3.82 0.28 +7.91%
SOVRENINS 0.28 0.02 +7.69%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
UAC-PROP 0.36 -0.04 -10.00%
IKEJAHOTEL 2.25 -0.25 -10.00%
GOLDINSURE 2.32 -0.24 -9.38%
JAPAULOIL 0.21 -0.02 -8.70%
CCNN 0.46 -0.04 -8.00%
Benchmark T-Bills Discount Rates
13-May-19 10-May-19 Change in Rates
87 Days 10.97% 11.29% -0.32%
178 Days 12.34% 12.46% 0.12%
339 Days. 12.50% 12.50% -0.00%
Source: FMDQ DQL for 13 May 2019
*T-Bills Discount Rates are slightly different from current market rates
Benchmark FGN Bond Yields
13-May-19 10-May-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 14.40% 14.44% -0.04%
5 yrs: 15.54% 27-Apr 2023 14.07% 14.07% 0.00%
10 yrs: 13.98% 17 Mar 2028 14.29% 14.22% 0.07%
20 yrs: 16.25% 18-Apr 2037  . 14.19% 14.19% 0.00%
Source: FMDQ DQL for 13 May 2019
Benchmark FGN EuroBond Yields
13-May-19 10-May-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.98% 4.92% 0.06%
5 yrs: NGERIA 6 3/8 07/12/23 5.72% 5.65% 0.07%
10 yrs: NGERIA 6 1/2 11/28/27 7.02% 6.93% -0.09%
20 yrs: NGERIA 7.696 02/23/38 8.07% 7.98% -0.09%
30 yrs: NGERIA 9.248 01/21/49 8.67% 8.59% -0.08%
Source: FMDQ DQL for 13 May 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 13.26% per annum
Added Benefit Personal accident insurance cover
AIICO Capital Guaranteed Income Note (GIN) Rates p.a.
Amount (NGN) 30 Days 60 Days 90 Days 180 Days 364 Days
10,000,001 – 50,000,000 10.00 10.50 11.00 12.00 13.00
50,000,001 – 100,000,000 11.00 11.25 11.50 12.50 14.00
100,000,001 – 400,000,000 12.00 12.25 12.50 13.00 14.50
Trading Treasury Bills Rates p.a.
Maturity Dates Tenor (Days) Discount Rate Effective Yield
01-Aug-19 80 9.85% 10.07%
17-Oct-19 157 12.05% 12.71%
07-Nov-19 178 11.90% 12.63%
16-Jan-20 248 12.05% 13.12%
Select Macro-economic Indices
Inflation % (March 2019) 11.25 (-1.66% ytd)
PMI (April 2019) 57.70
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 70.10 (-0.74% d/d)
External Reserve (US$’billion) 44.875 (+2.25% ytd)
GDP % (Q4 2018) +2.38% (Q3 2018: +1.81% y/y)
NSE All Share Index (ASI) 28,484.44 (-1.26% d/d; -9.36% ytd)
Market Capitalisation (₦’Trillion) 10.70

Financial Markets Update – 13 MAY 2019

Important Disclaimers
This document has been issued and approved by AIICO Capital and is based on information from various sources that we believe are reliable. However, no representation is made that it is accurate or complete. While reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer or solicitation to any person to enter into any trading transaction.
Investments discussed in this report may not be suitable for all investors. This report is provided solely for the information of AIICO Capital clients who are then expected to make their own investment decisions. AIICO Capital conducts designated investment business with market counter parties and customers and this document is directed only to such persons. AIICO Capital accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report is for private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of AIICO Capital. Users of this report should bear in mind that investments can fluctuate in price and value. Past performance is not necessarily a guide to future performance.
AIICO Capital is regulated by the Securities and Exchange Commission, and is licensed to provide fund and portfolio management services in Nigeria.